Data coming from the National Bureau of Statistics, CBN, and other official data-generating arms of the government should be used with caution. Especially given the appreciation of the difficult environment within which the data is obtained.
This is according to excerpts of a book authored by the Self Organizing Naija, a think tank group made up of diverse Nigerian-based economists and analysts.
A country’s economic data is leveraged by international communities for a variety of reasons including international funding and foreign investment. Thus, getting the data right is critical from the perspective of global investors, donor agencies, and international policymakers alike.
This upcoming book seeks to challenge national agencies tasked with aggregating nationwide data with being more robust and thorough especially given the fact that output will drive actionable ideas and facilitate policy-making and planning
- “Incontestably, endless repetition of these numbers in effect concretizes them as the truth, not just because they are continually being broadcasted, but more significantly because of the revered position of the issuing organisations.
- The global clout and probity of the organisations are without doubt. And if reputable authorities like the World Bank and IMF are the ones publishing these numbers, they must be accurate, they must be true in some sense? But is this right?” the group asks.
To buttress their point, they list 6 reasons why it is worth being skeptical of Nigeria’s headline economic numbers.
- Firstly, the World Bank and IMF do not actually generate these numbers. They are produced by national statistics bodies of individual country states. These data are then shared with the international bodies (to be evaluated and ranked).
- In the case of Nigeria, these figures are produced by the National Bureau of Statistics (NBS). The NBS is one of the highest quality MDAs in the country, and it was ably overseen by the Statistician-General, Mr. Simon Harry, who took over in August 2021 from Dr. Yemi Kale, a brilliant and outstanding civil servant who served in the post for 10 years.
- However, despite excellent leadership at the NBS and tenacity, they cannot entirely obliterate the challenges confronting the NBS, as they work under very difficult, with scant funding.
- The informal sector is at least 50% (and perhaps over 60%) of the Nigerian economy, meaning that much of our economic activity is not easily captured in the official statistics.
- In addition, GDP itself is not a simple methodological construct. In using GDP as a yardstick, we are trying to get all the economic activity in the country, reduced to a single Naira value.
- To estimate real GDP also means measuring price level. This essentially means we need to estimate inflation. Again, this is a difficult methodological problem, requiring methodological distortions in many indicators, for example adjusting price levels by quality (so-called hedonic adjustments).
- Rebasing has shown how far off official statistics are; in 2014, Nigeria rebased the economy, including previously under-captured sectors and Nigerians woke up to an economy that was basically double the size than previously reported. Nigeria is scheduled to go through another rebasing in 2022, and while the outcome is unlikely to be a doubling, we will again find the economy is much bigger than is being reported.
The group also recognizes the usefulness of the data but is quick to identify its limitations and should not be misconstrued as a single truth for making critical decisions especially when it comes to nation-building.
- None of these is meant to say that our estimates of GDP and inflation are not useful. They are. But they should be recognized as having considerable limitations and be simply used as guides and signposts.
- They should NOT be seen as some absolute truth for our decision-making, or even more importantly, should not be overused to create perceptions about our situation.
- Again, we urge the country to go deeper into what is behind the numbers. Despite the limitations in GDP or the inflation rate, they are believed by many to be highly important. For this group, reviewing these types of ranked statistics is all they see and is all that is available to them.
But what proof does the Self Organizing Naija group have beyond just assumptions and contraptions? They respond in the book by pointing out several instances where some of the World Bank’s data has been proven to be questionable. They for example question the methodology for determining Nigeria’s ease of doing business ranking.
For example, in the EoDB report for 2020, Nigeria achieved a score of 56.9, with a rank of 131 amongst 190 economies. There are obvious issues with this type of methodology, and they stir up questions such as:
- Are the indicators being measured the appropriate ones?
- Are the measurements for each indicator accurate? In fact, each indicator is on its own quite complex (an agglomeration of several metrics), yet the WB chooses a single metric within each indicator as its yardstick. Is this sufficient?
- Why are the weightings equal? Are all indicators of equal importance for what we are really after, which is an assessment of the operating environment for business?
- What, essentially, is the real meaning of the index number produced?
There are a number of additional challenges when we translate the numeric rating into a ranking. The most outstanding is that on sighting the numeric ratings, one might be confronted with limited choice due to the small differences amongst a large number of countries, but the forced ranking, over and over again, gives the impression of significant differences in EoDB.
They also highlight Nigeria’s population data, citing the fact that the most recent numbers are mere estimates since the last official census was conducted in 2006.
Nairametrics, the Self Organizing Naija Team, and the entire country mourn the untimely passing of the Statistician-General of Nigeria, Dr. Simon Harry. May his soul rest in perfect peace, Amen.